NAVARATNAM v HG METAL MANUFACTURING LIMITED [2023] NZCA 11

NAVARATNAM v HG METAL MANUFACTURING LIMITED [2023] NZCA 11 [14 February 2023]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA692/2020[2023] NZCA 11BETWEEN VASHIHARAN NAVARATNAMFirst AppellantSHERINE NAVARATNAMSecond AppellantAND HG METAL MANUFACTURINGLIMITEDRespondentCA152/2022BETWEEN VASHIHARAN NAVARATNAMFirst AppellantSHERINE NAVARATNAMSecond AppellantAND HIGH COURT AT AUCKLANDFirst RespondentHG METAL MANUFACTURINGLIMITEDSecond RespondentHearing: 18 July 2022Court: Courtney, Thomas and Peters JJCounsel: First Appellant in Person for CA692/2020 and CA152/2022Second Appellant in Person in CA692/2020 and CA152/2022T B Fitzgerald and B J Dominikovich for Respondent inCA692/2020 and Second Respondent in CA152/2022No appearance for First Respondent in CA152/2022Judgment: 14 February 2023 at 10 amJUDGMENT OF THE COURTHG Metal is entitled to indemnity costs of $128,686.70 against Mr and MrsNavaratnam jointly and severally.____________________________________________________________________REASONS OF THE COURT(Given by Courtney J)[1] On 8 September 2022 this Court struck out two appeals brought byMr and Mrs Navaratnam.1 The appeals arose from an application by HG MetalManufacturing Ltd (HG Metal) to enforce an arbitral award obtained againstMr and Mrs Navaratnam in Singapore in 2020. Specifically, the appeals were againsta decision of Woolford J entering judgment against Mrs Navaratnam by default2 anda decision of Jagose J striking out judicial review proceedings brought to challenge adecision of Katz J in which she entered judgment against Mr Navaratnam.3[2] The decision to strike out the appeals was made in the context of a strike outapplication by HG Metal. The appeal against Woolford J's decision was struck out asa result of Mr and Mrs Navaratnam's numerous defaults in complying with this Court'srules.4 The appeal against Jagose J's decision was struck out as an abuse of processbecause it sought to relitigate an issue that had been finally determined by Katz J,namely whether HG Metal had satisfied the requirements of art 35(2) of theArbitration Act 1996 by providing a properly authenticated copy of the award.5[3] HG Metal sought indemnity costs in the event of the appeals being struck out.In our substantive judgment we directed the filing of memoranda to address this issue.1 Navaratnam v HG Metal Manufacturing Ltd [2022] NZCA 425 [Court of Appeal strike outdecision].2 HG Metal Manufacturing Ltd v Navaratnam HC Auckland CIV 2020-404-1955, 22 October 2020[Minute of Woolford J].3 HG Metal Manufacturing Ltd v Navaratnam [2021] NZHC 1920; and Navaratnam v High Courtof Auckland [2022] NZHC 371.4 Court of Appeal strike out decision, above n 1, at [48]. See Court of Appeal (Civil) Rules,r 44A(1)(a).5 Court of Appeal strike out decision, above n 1, at [25]–[26].HG Metal filed a memorandum as to costs on 28 September 2022.Mr and Mrs Navaratnam did not file a memorandum that expressly dealt with costs onthe strike-out application but, rather, applied for recall of the decision striking out theappeals. However, their submissions in relation to the recall included submissionswhich we treat as also relating to the costs on the strike-out application.[4] It was appropriate to postpone dealing with costs on the strike-out applicationuntil after the recall application had been disposed of. However, HG Metal also soughtindemnity costs on the recall in the event that it was refused. That meant that theissues raised in relation to costs on the strike-out application necessarily fell to bedetermined first in the recall application. In a decision delivered on 14 February 2023we declined the application for recall and made an order for indemnity costs againstboth Mr and Mrs Navartnam.6 We now determine HG Metal's application forindemnity costs on the strike-out application. In doing so we necessarily repeat theanalysis relating to indemnity costs from the recall decision.[5] The claim for indemnity costs is based on Mr and Mrs Navaratnam's liabilityunder the guarantee they both signed on 24 September 2013, which gave rise to thearbitral award against them. The guarantee contains the following cl 6:The Guarantor shall indemnify HG Metal against the full costs (includinglegal fees as between solicitor and client) of enforcing or attempting to enforcethis Guarantee.[6] In her decision on costs Katz J reviewed the basis on which indemnity costsmight be awarded pursuant to a contractual obligation and concluded that the costsHG Metal had incurred in applying to recognise and enforce the award in New Zealandwere costs of "enforcing or attempting to enforce" the guarantee for the purposes ofcl 6.7 As we indicated in our substantive judgment, Katz J's finding as toMr Navaratnam's liability for indemnity costs arising from the guarantee means thatMr Navaratnam will be liable for indemnity costs in respect of the current appeal.86 Navaratnam v HG Metal Manufacturing Ltd [2023] NZCA 10.7 HG Metal Manufacturing Ltd v Navaratnam [2021] NZHC 2498 at [21].8 Court of Appeal strike out decision, above n 1, at [52].[7] There is no basis on which to differentiate Mrs Navaratnam's position fromthat of her husband on this point. She was a co-guarantor and subject to the sameprovisions, including cl 6.[8] In their memorandum filed in support of the recall application,Mr and Mrs Navaratnam submitted that it was premature to consider the question ofindemnity costs until their ground of challenge to HG Metal's original application forrecognition and enforcement based on its failure to satisfy art 35(2) of theArbitration Act had been determined. As we made clear in our substantive judgment,this argument has been finally determined and cannot be revisited. It therefore doesnot provide any basis on which to refuse to award indemnity costs in accordance withthe terms of the guarantee.[9] HG Metal has claimed a total of $128,686.70 (excluding GST). This figurecomprises:• Solicitor/client costs $122,578.74• Service charge $3,064.47• Disbursements $3,043.49[10] These costs relate to both appeals that were the subject of the strike outapplication. HG Metal's counsel advises that the appeals were invoiced together alongwith other related litigation such as the bankruptcy proceedings. However, counselhas made an assessment of the steps and cost of work relating only to these twoappeals. Having reviewed counsel's memorandum, we are satisfied that all the itemsclaimed for relate to these appeals and were reasonably necessary. We observe thatthe time taken to dispose of these appeals was unnecessarily increased by Mr and MrsNavaratnam's failure to comply with the Court's directions and by the steps taken bythem for the sole purpose of delaying the final determination of the matter.[11] We make an order that HG Metal is entitled to indemnity costs of $128,686.70against Mr and Mrs Navaratnam jointly and severally.Solicitors:Bell Gully, Auckland for HG Metal Manufacturing Ltd